Different Type of Mortgages Explained

In these present times where opportunities lurk in every corner, isn’t it comforting to know that there are people offering to lend a hand when our budget needs an extra nudge for us to be able to grab a passing opportunity by the rein? Mortgage loans have been the strong wall for individuals badly in need of money. And you also can benefit from these loans should the need arises. But before you go stumbling to apply for one, isn’t it better to take a moment and learn the different types of mortgage loan?

Mortgage loans, basically, are given loans protected by a borrower’s property. A mortgage note is used to prove the presence of the said loan and the property as collateral. And whatever reasons you have in applying for a mortgage loan, a property—termed as mortgage—is required to be encumbered to secure the loan. But aside from the granted mortgage, you must be able to prove that you are a good payer through a good credit history.

There two types of mortgage loan: the fixed rate and the adjustable rate mortgage. Fixed-rate mortgage is a loan with a fixed interest rate to be paid over a periodic payment schedule for the entire lifespan of the loan, while the adjustable rate mortgage is a loan that offers a fixed interest rate over a certain span of time—say a year—and gradually lowers down as the loan approaches its maturity. The latter presents a transfer of interest risk from the lender to the borrower.

The advantage of adjustable rate mortgage over the fixed rate loan is the ability of the borrower to evade later months’ interests by paying off the loan the soonest. But the factors you need to consider in applying a mortgage loan are the interest rates, maximum loan you can get and maximum time allowed of paying off the loan. So it’s necessary for you to study each mortgage loan being offered. You don’t want to end up in a loan with a sky-high interest rates, shorter payment maturity or lower loan offers.

Once you’ve already assessed all the above factors, make a list and slowly narrow them down. Verify their legitimacy and start choosing the best one. One more thing, don’t go applying for two or more lenders. It’s not advisable. One failed mortgage loan application takes one point from your credit record score. So get the best one. Focus on it. And you should just be fine.

 

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